The BPC market in the MENA region is going through a transformational period driven by evolving consumer needs and shopper persona. While legacy brands have undertaken various initiatives to fulfill emerging trends, consumers aren’t fully satisfied. This has led to the emergence of D2C brands who have been able to develop meaningful relationships with customers by aligning with their values, resonating through inclusive products and by offering a personalized experience.

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Is direct the way to go for
Beauty?
November 2022

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Beauty & Personal Care segment is a sizable portion of overall retail sales,
growing faster than overall retail in MENA
346
26%
2019
30%
28%
2025(F)
2021
244
259
Highlights
• BPC sector is transforming
as consumer demands are
rapidly evolving
• Micro-influencers have
influenced this behavioral
shift by democratizing
access to niche products
• Product innovations are now
centered around
sustainability and
inclusiveness
• Enhanced self care regimes
and the proliferation of
gender agnostic BPC market
are anticipated to drive future
growth
Note(s): 1. MENA includes GCC countries, Egypt, Morocco, Iraq, Tunisia, Algeria, Libya, Lebanon, Yemen, Syria & Jordan
Source(s): Redseer Primary Research and Analysis
MENA1 Retail Market Size
In %, USD Bn, 2019 - 2025 (F)
Others
BPC Retail
Growing consumer mindfulness of
BPC products will drive BPC’s faster
growth relative to overall retail
2%
growth in
BPC market
share

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Online BPC market is poised to drive the overall growth of the MENA market,
growing at 22% CAGR
MENA1 BPC Retail Market Size and Split
In %, USD Bn, 2019 - 2025 (F)
3%
2021
6%
2019
9%
2025 (F)
66
72
95
Online
Offline
6%
22%
CAGR (2021-25)
(in %)
Note(s): 1. MENA includes GCC countries, Egypt, Morocco, Iraq, Tunisia, Algeria, Libya, Lebanon, Yemen, Syria & Jordan
Source(s): Redseer Primary Research and Analysis
3% decline
in offline BPC
market share

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Beauty consumers increasingly have differing needs; large brands are trying to
adapt to these needs
Emerging Consumer Trends Legacy Brand Initiatives
Rising environmental and ethical awareness has
driven demand for sustainable products
Enhanced self care regimes and the proliferation
of gender agnostic BPC market
Online channels are serving as primary medium for
discovering and engaging with BPC products
Consumers seek inclusive products that reflect
their lifestyles
Various consumer needs continue to remain unfulfilled
Source(s): Redseer Primary Research and Analysis
BPC Consumer - Supplier Dynamics
Descriptive
The industry is witnessing a shift to “clean and
conscious” as brands are undertaking sustainable
initiatives
Traditional BPC brands haven’t reacted swiftly,
and they continue to remain female first
Brands are increasingly partnering with social
media influencers to promote products
Legacy brands are gradually building products for
markets it previously failed to address
Consumer
Satisfaction

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Such niche demands, coupled with the evolving shopper persona is giving rise
to a new breed of Direct-to-consumer (D2C) brands
Niche demands:
• Sustainable products
• Inclusive products
• Influencer endorsed products
Shopper Persona:
• Heavy digital media users
• Impulsive buyers
• Brand and product explorers
Emergence of D2C brands to fill white gaps
D2C brands develop meaningful relationships with customers by aligning
with their values
Digital native brands are able to distinguish themselves from others by
specializing in niche product categories
D2C brands offer customers personalized experiences by leveraging
customer data
1
2
3
Source(s): Redseer Primary Research and Analysis

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Although still nascent, numerous tailwinds have supported the proliferation of
D2C brands in the BPC online retail market
MENA1 BPC Online Retail Market – D2C vs Non D2C
In %, 2019 – 2022
D2C
Source(s): Redseer Primary Research and Analysis
Growth drivers & challenges
Retailers
Personalised shopping experience provided through efficient
data capture
Nimbleness to service niche needs including sustainable, natural
and inclusive products based on evolving consumer behaviour
Setting up logistics (Infrastructure, delivery, etc.)
Generating consumer traffic and building loyalty
Drivers
Challenges
15-20% of the online BPC retail sales come from the D2C
channel
2019 2022
8-12%
15-20%
D2C
Non D2C
Note(s): 1. MENA figures are representative of UAE & KSA
Strategic partnerships with content creators to resonate directly
with consumers

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These brands however face various headwinds that affects their profitability
while continuing to gain scale
Challenges
Severity of
Challenges
Solutions
Implementation
Timeline
Heightened
competition
Product Differentiation:
Brands need to leverage customer data and
emphasise on R&D to continuously bring
differentiated products into the market
Skyrocketing
customer
acquisition cost
Influencer Marketing:
Unlock the power of content creators, who have now
emerged as the most influential medium enabling
discovery and purchase of BPC products
High logistics
costs
3PL Partnership:
Outsource logistics to 3PL’s offering inventory
management and end to end fulfilment services to
provide customers with quick delivery at lower costs
Low consumer
brand loyalty
Omnichannel Loyalty Programs:
Develop omnichannel presence to alleviate purchase
convenience and reward repeat buyers through roll
out of loyalty programs
MENA BPC D2C Challenges
Descriptive
Product
Marketing
Operation
Consumers
Short Term Medium Term
Source(s): Redseer Primary Research and Analysis

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D2C players across the world have strategically solutioned for these challenges
through organic and inorganic means
Challenges
Global Learnings
Organic Growth Inorganic Growth
Heightened
competition
Skyrocketing
customer
acquisition cost
High logistics
costs
Low consumer
brand loyalty
Product
Marketing
Operation
Consumers
Develop unique product offerings
• Fenty Beauty launched by positioning itself as a diverse
brand for a diverse customer base by building products
for markets that were ignored by legacy brands
Sign strategic partnerships with micro-influencers
• Huda Beauty’s marketing strategy is pinned on social
media - extensive collaborations with micro-influencers -
to drive engagement and appeal personally to shoppers
Incentivise repeat purchases through loyalty programs
• Ulta Beauty offers an omnichannel loyalty program that
has close to 32 million members who make up more than
95% of the sales
Outsource logistics and focus on product development
• KJM partnered with a 3PL provider to optimize inventory
management and fulfilment, driving 70% reduction in
shipping fee and higher consumer satisfaction
BPC D2C Challenges – Global Best Practices
Descriptive
Source(s): Redseer Primary Research and Analysis
Mergers & Acquisitions
• Fenty Beauty - a joint
venture between Rihanna
and LVMH - leveraged
Rihanna’s vision and
stardom, while utilizing
LVMH’s technical
expertise, logistic
capabilities and financial
backing to build a skincare
giant

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Players who can crack the D2C ecosystem in BPC will be at the receiving end of
a large opportunity, with 30-35% of online market to be taken by D2C in 2025
MENA1 BPC Online Retail Market – D2C vs Non D2C
In %, 2022 – 2025 (F)
Roughly 1/3rd of the online retail sales in BPC will come from D2C players in 2025
Future Growth Drivers
Source(s): Redseer Primary Research and Analysis
2025 (F)
2022
15-20%
30-35%
D2C
Non D2C
Note(s): 1. MENA figures are representative of UAE & KSA
Growing consumer
demand for sustainable
products
1
Differentiated product
offerings of D2C brands
2
Growing presence of
beauty content creators
in the region
3
Government led
initiatives to boost local
production and the SME
ecosystem
4

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Authors
Sandeep Ganediwalla
Partner
Akshay Jayaprakasan
Associate Partner
Abhishek Rajput
Senior Consultant

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Project Team
Milli Saklani
Business Analyst
Nikhil Harikumar
Business Analyst
Leticia El Zein
Business Analyst

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Source(s): Consultancy Middle East
Top strategy consulting firms in the Middle East
Top e-commerce consulting firms in the Middle East
Top retail consulting firms in the Middle East
Top private equity consulting firms in the Middle East
Platinum Consulting Firm Pioneering the METAP Digital Economy
About redseer - Industry Pioneer in the Middle East

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